IRS Form 433-B Instructions: Assets, Income, and Submission

To fill out IRS Form 433-B, the Collection Information Statement for Businesses, you pick the version that matches your request, pull together supporting financial records, and work through five sections that report the business’s identity, ownership, financial history, assets and liabilities, and monthly income and expenses. Every line needs either a number or “N/A,” every figure needs backup, and the form gets signed under penalty of perjury by a partner, corporate officer, or LLC member.¹ Get the details right the first time and you avoid weeks of follow-up with a Revenue Officer.

Pick the Right Version First

There are two forms with almost the same name. The standard Form 433-B is what your business files when it wants an installment agreement or is asking the IRS to temporarily hold off on collection because the business cannot pay right now.² Form 433-B (OIC) is the version for an Offer in Compromise, and it has extra fields that feed the IRS’s reasonable collection potential calculation.³ Filing the wrong one means starting over.

Before the IRS accepts either version, the business must be current on all filing requirements. Every required return has to be filed, and estimated tax payments for the current year have to be made. For an Offer in Compromise, you also need to have received a bill for at least one of the debts you’re including.⁴ If you have employees, expect the Revenue Officer to check that current payroll deposits are landing on time. Ongoing deposit failures read as non-compliance regardless of how clean the form looks.

Gather the Documents Before You Start

Every figure on the form has to be backed up. Pulling records together first will save hours later.

Six months of statements for every business bank account, and three months for every investment account. The OIC version explicitly requires this, and a Revenue Officer working a standard 433-B will ask for the same thing.³
A profit and loss statement covering a period that reflects your typical operations. Publication 5059 suggests 3, 6, 9, or 12 months, whichever paints the truest picture.¹
The most recent balance sheet, so you can cross-check asset values and liabilities.
Loan documents for every mortgage, equipment loan, and line of credit.
Real estate deeds and vehicle titles to verify ownership and equity.
An accounts receivable aging report showing what customers owe and how collectible it is.
Depreciation schedules. Depreciation itself is not an allowable expense on the form, but the IRS may ask for the schedules to verify asset values.³

Section 1: Business Information

Enter the business name, street and mailing addresses, phone, type of business, website, EIN, entity type, and date established or incorporated.⁵ For an LLC, indicate whether it’s taxed as a corporation or as another type of LLC, and give the number of members.

A few fields catch people. The form asks how many employees you have, your monthly gross payroll, how frequently the business deposits employment taxes, and whether it’s enrolled in the Electronic Federal Tax Payment System. If the business accepts credit cards, list each card type, the merchant account number, and the issuing bank.⁵

Section 2: Business Personnel and Contacts

List each partner, corporate officer, LLC member, or major shareholder with their full name, title, home address, phone numbers, taxpayer identification number, ownership percentage, and annual salary or draw.⁵ Note which of these individuals is responsible for depositing payroll taxes.

This isn’t just paperwork. If payroll taxes are part of the debt, the people flagged as responsible for deposits can be pursued personally under the trust fund recovery penalty. Owner salary and draw figures also matter, because the IRS will check whether compensation is reasonable given the business’s revenue and the outstanding tax debt.

Section 3: Other Financial Information

Section 3 asks whether the business is in any lawsuits, has ever filed bankruptcy, has related parties who owe it money, and whether any assets have been transferred for less than full value in the last ten years.⁵ The asset transfer question is the one to answer carefully. If the business sold equipment, vehicles, or real estate to an insider at below-market price in the past decade, the IRS will want details, and those transfers can be reversed or counted as equity available to pay the debt.

The section also covers business affiliations such as parent or subsidiary companies, and whether you expect income to rise or fall. An honest report of declining revenue can help your case by supporting a lower payment.⁵

Section 4: Assets and Liabilities

This section takes the most time and carries the most weight. List every asset the business owns: cash on hand, bank balances, accounts receivable, inventory, vehicles, equipment, real property, and any other investments or assets of value.

Quick Sale Value, Not Fair Market Value

The IRS doesn’t use what you paid or what an asset might fetch in a perfect market. It uses “quick sale value,” the price you could get selling within roughly 90 days. Quick sale value is normally 80 percent of fair market value, though a Revenue Officer can adjust that percentage based on the asset type and market conditions.⁶ In a strong real estate market, the IRS might set quick sale value equal to full market value.

For each asset with a loan against it, list the loan balance. Quick sale value minus the loan balance is the net equity, and that equity figure is what the IRS treats as available to pay the debt. A piece of equipment with a $50,000 fair market value and a $35,000 loan has a quick sale value of $40,000 (80 percent) and net equity of $5,000.

Liabilities

After assets, list every creditor. Secured debts (mortgages, equipment loans) should be tied to the specific asset they’re attached to. Unsecured debts (credit cards, vendor invoices) go on separate lines with the creditor name and current balance. Total liabilities against total assets produces the business’s net worth, which feeds directly into the collection analysis.

Section 5: Monthly Income and Expenses

This is the section that sets your monthly payment.

Averaging Income

Choose a time period that reflects normal operations. Publication 5059 lists 3, 6, 9, or 12 months.¹ If one quarter was unusually strong because of a one-time contract, a 12-month average will be more accurate. Report total gross receipts, then subtract returns or allowances to arrive at gross income. On the OIC version you also need cost of goods sold to arrive at true gross profit.³

Expenses Are Monthly and Cash Only

List every operating expense as a monthly figure, even when the business pays quarterly or annually. Divide an annual insurance premium by 12; divide a quarterly estimate by 3. Common allowable expenses include rent, utilities, insurance, payroll, vehicle costs, and supplies.

Two rules trip people up. Only actual cash outlays count, so exclude depreciation, amortization, and any other non-cash accounting entries. And unlike individual taxpayers, whose expenses are checked against national and local standards, business expenses are judged on whether they’re actually necessary to operate the business.⁷ A Revenue Officer will question anything that looks excessive.

Owner compensation draws the most scrutiny. If you’re pulling $15,000 a month from a business grossing $40,000, expect pushback. The draw has to be defensible against the business’s size, industry, and what it takes to keep the owner engaged.

Net Monthly Income

Subtract total monthly expenses from total monthly income. What’s left is what the IRS treats as available to pay down the tax debt. Zero or negative may qualify the business for currently-not-collectible status, which pauses collection until the picture improves.² A positive balance becomes the starting point for an installment payment amount.

How the IRS Uses Your Numbers

For an installment agreement, the IRS takes your monthly surplus and multiplies it across the months remaining on the 10-year collection statute. If that covers the full liability plus penalties and interest, you get a full-pay agreement. If it falls short, you may qualify for a partial-pay agreement, with periodic financial reviews to see whether things have improved.

For an Offer in Compromise, the IRS calculates reasonable collection potential by combining the net equity in assets with anticipated future income minus allowable expenses.⁸ Your offer has to meet or exceed that number to be accepted.

Signing and Submitting

Every line gets a figure or “N/A.” Blank lines trigger follow-up questions. A corporate officer, partner, or LLC member signs under penalty of perjury, certifying the information is true, correct, and complete.¹ That perjury language is real. Understating assets or padding expenses is a federal offense, not just grounds for denial.

Send the completed form with all supporting documents (bank statements, profit and loss statement, loan agreements, asset documentation) to the address on your IRS notice or to your assigned Revenue Officer. For an Offer in Compromise, Form 433-B (OIC) goes in with your Form 656 offer package. Expect a review that can run several weeks or longer, and expect follow-up requests for clarification on specific entries.

If the IRS Rejects an Expense or Overvalues an Asset

If the Revenue Officer disallows expenses, sets an asset value you disagree with, or proposes a payment the business can’t afford, you have options. The Collection Appeals Program is the faster route: if the IRS rejects, modifies, or terminates an installment agreement, file Form 9423 within 30 calendar days with the office that took the action.⁹¹⁰¹¹

Whichever route you take, bring documentation. If the IRS valued equipment too high, get a professional appraisal. If the IRS called an expense unnecessary, produce contracts or invoices that show why the business can’t operate without it. The businesses that win these appeals are the ones that show up with numbers.

1
Internal Revenue Service. IRS Publication 5059 – Instructions for Form 433-B
2
Internal Revenue Service. Temporarily Delay the Collection Process
3
Internal Revenue Service. IRS Form 433-B (OIC) – Collection Information Statement for Businesses
4
Internal Revenue Service. Topic No. 202, Tax Payment Options
5
Internal Revenue Service. Collection Information Statement for Businesses
6
Internal Revenue Service. Internal Revenue Manual 5.8.5 – Financial Analysis
7
Internal Revenue Service. Internal Revenue Manual 5.15.1 – Financial Analysis Handbook
8
Internal Revenue Service. Topic No. 204, Offers in Compromise
9
Internal Revenue Service. Form 9423, Collection Appeal Request Instructions
10
Internal Revenue Service. Collection Due Process (CDP) FAQs
11
Internal Revenue Service. Form 12153, Request for a Collection Due Process or Equivalent Hearing